The use of letters of credit (L/Cs) in the US municipal bond market is ebbing during 2013 according to Thomson Reuters data released in July.

In the first half of 2013, there were 78 per cent fewer L/Cs issued than in the same period of 2012.

Financial crisis

There had been a surge in the use of L/Cs as issuers turned to them to replace bond insurance in the wake of the global financial crisis.

Many issuers had also used them to move their debt from auction-rate securities to variable rates when the market for auction rates froze in 2009.

L/C providers

Wells Fargo Bank was the biggest provider of L/Cs over the first six months of 2013, with a 30 per cent market share.

Citibank, which provided the most L/Cs in the first half of last year, slipped to third place behind JP Morgan Chase.

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